Glossary of Terms

A type of currency that uses cryptography instead of a central bank to provide security and verify transactions. Bitcoin is the first cryptocurrency.

Altcoin

An altcoin is the community accepted name for any coin that isn’t Bitcoin. Altcoins that we’ve previously discussed include Dash and Monero.

Blockchain

A publicly shared record of every (e.g bitcoin) transaction that has ever been processed. The blockchain is in chronological order to easily navigate where your bitcoins came from and where they go after you send them to someone else. Every ten minutes a new block is added to the blockchain through mining.

Block

A block is a permanent record of data stored in the blockchain, acting like a page or ledger. Each block contains and confirms pending transactions. Roughly every 10 minutes, on average, a new block along with the transactions it contains is added to the blockchain through mining.

Block Height

Block height refers to the number of blocks connected together in the block chain. For example, Height 0, would be the very first block, which is also called the Genesis Block.

Blockchain Explorer

Explorer is an online tool/site that allows you to view information about blocks, addresses, and transactions on the Coin blockchain.

Asset

Asset (or Cryptoasset) is a currency or token that depends on a cryptocurrency blockchain (usually on Ethereum blockchain) as a platform to operate.

Bitcoin Testnet

The testnet is an alternative Bitcoin block chain, to be used for testing. Testnet coins are separate and distinct from actual bitcoins, and are never supposed to have any value. This allows application developers or bitcoin testers to experiment, without having to use real bitcoins or worrying about breaking the main bitcoin chain.

Fiat money

Fiat or Fiat money physical money (paper money and coins), while representative money is something that represents intent to pay the money such as a check. Fiat money is backed by the government, and representative money can be backed by different things. For example, a personal check is backed by the money in a bank account. Without backing, both fiat money and representative money are completely worthless.

Address (Public Key)

A string of letters and numbers which bitcoins can be sent to and from. A bitcoin address can be shared publicly, and like sending a message to an email address, a bitcoin address can be provided to others that wish to send you bitcoin.

Private Key

Every public key (bitcoin address) has a private key associated with it. A private key is a secret piece of data that proves your right to spend bitcoins from your wallet. Your private key(s) are stored in your computer if you use a software wallet; they are stored on some remote servers if you use a web wallet. If you don’t encrypt your bitcoin wallet it makes it easier for someone to steal your private keys. Anyone with access to your private keys can spend your bitcoin from any computer worldwide.

Mining

"The act of generating new bitcoins/Altcoins by solving cryptographic problems using computing hardware.", also the process by which transactions are verified and added to a blockchain. This process of solving cryptographic problems using computing hardware also triggers the release of cryptocurrencies.

Block Reward

A reward that is given to a miner after successfully hashing a transaction block.

Mining Pools

In the context of cryptocurrency mining, a mining pool is the pooling of resources by miners, who share their processing power over a network, to split the reward equally, according to the amount of work they contributed to solving a block. A "share" is awarded to members of the mining pool who present a valid proof of work that their miner solved. Mining in pools began when the difficulty for mining increased to the point where it could take years for slower miners to generate a block. The solution to this problem was for miners to pool their resources so they could generate blocks more quickly and therefore receive a portion of the block reward on a consistent basis, rather than randomly once every few years

Cloud Mining

Cloud Mining is the process of mining utilizing a remote datacenter with shared processing power often contracted through a Cloud Mining company. This type of mining allows users to mine Bitcoins / Altcoins without having to manage their own hardware. Since Cloud Mining is provided as a service there is generally some cost, and this can result in lower returns for the miner.

Mining rig

A computer especially designed for processing proof-of-work blockchains, like Ethereum. They often consist of multiple high-end graphic processors (GPUs) to maximize their processing power.

Node

A computer that possesses a copy of the blockchain and is working to maintain it.

Fork

A situation where a blockchain splits into two separate chains. Forks generally happen in the crypto-world when new ‘governance rules’ are built into the blockchain’s code.

Hash

"A mathematical process that takes a variable amount of data and produces a shorter, fixed-length output."

PoW

Proof of work:
"A system that ties mining capability to computational power."

PoS

Proof of Stake:
"An alternative to proof of work, in which your exiting stake in a currency is used to calculate the amount of that currency that you can mine."

Pump and Dump

"Inflating the value of a financial asset that has been produced or acquired cheaply, using aggressive publicity and often misleading statements."

Whales

A whale is a large holder, who owns enough coins to move the market by a substantial amount when they buy or sell.

Bit

A common unit used to designate a single sub-unit of a bitcoin. 1,000,000 bits is equivalent to 1 bitcoin.

mBTC

A bitcoin metric of 1 thousandth of a bitcoin (0.001 BTC).

Satoshi

The satoshi is currently the smallest unit of the bitcoin (It is a one hundred millionth of a single bitcoin), The unit has been named in collective homage to the original creator of Bitcoin, Satoshi Nakamoto.

Satoshi Nakamoto

the pseudonym used by the original inventor of the Bitcoin protocol.

Wallet

Where you store your bitcoins. A bitcoin wallet is a program that manages all of your bitcoin addresses and allows you to save or spend your bitcoin.

Paper wallet

A hard copy containing bitcoin/altcoin wallet information such as addresses and their corresponding private keys. Paper wallets are often used to store bitcoins/altcoins securely in a non-software capacity.

Hardware wallet

A Hardware wallet is a USB device with usually 2 buttons. It stores the keys. The private keys never leave the device so they won’t be stolen/copied by malware. A hardware wallet communicates with a wallet on the computer or a web wallet running in a browser. Transactions are send from the client computer to the hardware wallet through a USB connection. A user can sign/confirm or cancel a transaction by using the buttons on the hardware wallet. Hardware wallets often use a PIN chosen by the user or a password to confirm transactions. You also don’t have to download the entire blockchain.

Electrum Wallet

Lightweight wallet, based on a client-server protocol, It protects you from losing coins in a backup mistake or computer failure, because your wallet can be recovered from a secret phrase (Seed) that you can write on paper or learn by heart. There is no waiting time when you start the Wallet, because it does not download the Coin blockchain.

HD Wallet

An HD wallet, or hierarchical deterministic wallet, is a system of bitcoin/altcoin key and address generation that allows for an initial seed (a number based on the 12 random words) to control subsequent behavior. Standard wallets generate both change and new addresses in a random fashion, meaning that the private keys to each newly generated address are wholly independent from one another. In a standard wallet, if a newly generated private key is lost, it cannot be derived from previous inputs to that standard wallet system. However, with HD wallets, an initial seed value acts as a sort of master key, such that private keys generated after the initial seeding are regenerable as long as that single seed value remains known to the user. The usability upside to this deterministic system is coupled with the potential vulnerability of losing control of many private keys if the seed is compromised.

Hot Wallet

A Bitcoin/altcoin wallet that resides on a device that is connected to the internet. A wallet installed on a desktop computer or smartphone is usually a hot wallet.

Cold Storage

The storage of Bitcoin/altcoin private keys in any fashion that is disconnected from the internet. Typical cold storage includes USB drives, offline computers, or paper wallets.

Market Cap

The market capitalization of a digital currency is the total value of all its coins. It is usually used to compute the currently available supply rather than the expected total supply, and excluding unreleased/premine coins/tokens. So, market cap is derived by multiplying the market price by the number of coins that are released to the open market.

Premine

When some or all of a coin’s initial supply is generated automatically by the developer at, or prior to, the public launch, rather than being generated over time through a form of mining, this is called a ‘pre-mine’ or ‘premine’. Pre-mines can be used for legitimate purposes: for example to crowdfund development through an ICO, or to put into a fund for the continued development and promotion of a coin. They can also be dumped onto the market, for a quick and easy profit, by a developer who then abandons the coin and disappears in a kind of exit scam.

ICO

An Initial Coin Offering (also called an ICO) is an event in which a new cryptocurrency sells advance tokens from its overall coinbase, in exchange for upfront capital. ICOs are frequently used for developers of a new cryptocurrency to raise capital.

ROI

Return on Investment. The percentage of how much money has been made compared to an initial investment. (i.e., 100% ROI means someone doubled their money).

Confirmation

A confirmation means that the blockchain transaction has been verified by the network. This happens through a process known as mining, in a proof-of-work system (e.g. Bitcoin). Once a transaction is confirmed, it cannot be reversed or double spent. The more confirmations a transaction has, the harder it becomes to perform a double spend attack.

Double Spend

Double spend refers to a scenario, in the Bitcoin network, where someone tries to send a bitcoin transaction to two different recipients at the same time. However, once a bitcoin transaction is confirmed, it makes it nearly impossible to double spend it. The more confirmations that a particular transaction has, the harder it becomes to double spend the bitcoins.

Genesis Block

The very first block in a block chain.

Halving

Bitcoins have a finite supply, which makes them a scarce digital commodity. The total amount of bitcoins that will ever be issued is 21 million. The number of bitcoins generated per block is decreased 50% every four years. This is called “halving.” The final halving will take place in the year 2140.

Scrypt

An alternative proof of work system to SHA-256, designed to be particularly friendly to CPU and GPU miners, while offering little advantage to ASIC miners.

Smart Contracts

Smart contracts are contracts whose terms are recorded in a computer language instead of legal language. Smart contracts can be automatically executed by a computing system, such as a suitable distributed ledger system.

Transaction Fee

A small fee imposed on some transactions sent across the bitcoin network. The transaction fee is awarded to the miner that successfully hashes the block containing the relevant transaction.

Whitepaper

A documentation describing a crypto currencies protocol in detail

P2P

Peer-to-peer (P2P) refers to direct, decentralized cryptocurrency interactions between two parties or more. No bank or other financial institution is required as a third party.

Decentralized

Without a central authority or controlling party. Bitcoin is a decentralized network since no company, government, or individual is in control of it.

DAPPS

DApp is an abbreviated form for decentralized application, A DApp has its backend code running on a decentralized peer-to-peer network. Contrast this with an app where the backend code is running on centralized servers.

Open Source

Software whose code is made publicly available and that is free to distribute. Bitcoin is an open source project and arguably the first open source money.

Mooning

In the crypto-world, this does not mean exposing your buttocks. It is referring to a price going up astronomical levels.

HODL

Hodl: The intentionally misspelled word hodl has its roots in a December 2013 post on the Bitcoin Talk forum, “I AM HODLING”; when the author, GameKyuubi, couldn’t be bothered to fix his typo, the community instantly turned it into a verb: to hodl. Along with other terms, hodl is an effective litmus test for sussing out newcomers, carpetbaggers, and tourists.

Lambo

A running joke among traders, you’re cryptorich when you can buy a Lamborghini.